Palantir Technologies and Anduril Industries are in talks with several competitors, including SpaceX, OpenAI, and Scale AI, to form a mega-consortium aimed at securing U.S. government contracts.

This consortium seeks to harness the innovative capabilities of Silicon Valley firms to enhance U.S. defense technology and create a new generation of defense contractors.

The initiative is designed to provide the U.S. government with cutting-edge weapons and technology more efficiently.

Elon Musk, who has been appointed co-leader of the efficiency drive, has been vocal about the need to scrutinize Pentagon spending, particularly criticizing programs like the F-35 fighter jet.

With a defense budget of $850 billion, the Pentagon attracts significant interest from major technology companies looking to enter the defense sector.

The demand for tech companies in defense has surged due to ongoing international conflicts and rising geopolitical tensions, particularly between the U.S. and China.

The consortium aims to challenge established defense contractors such as Lockheed Martin and Boeing, which have dominated the market.

An announcement regarding the formation of this consortium is expected in January 2025, with initial partnerships potentially being revealed soon.

Despite the ongoing discussions, companies like Palantir, Anduril, and SpaceX have not commented on the consortium's progress.

Palantir's stock has skyrocketed by 300% over the past year, reflecting its growing influence in the defense sector and surpassing Lockheed Martin's market capitalization.

This collaboration could open up new opportunities for SpaceX in defense and space contracts, especially under the upcoming Trump administration.

Earlier this month, Palantir and Anduril announced plans to integrate their technologies to bolster national security AI capabilities.